Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding the Pricing Schedule for NASD Members Using the ITS/CAES System, Brut, and Inet To Trade Securities Not Listed on The NASDAQ Stock Market LLC, 52358-52361 [E6-14599]
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52358
Federal Register / Vol. 71, No. 171 / Tuesday, September 5, 2006 / Notices
of the Act,13 for approving the proposed
rule change prior to the thirtieth day
after the date of publication of notice
thereof in the Federal Register.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,14 that the
proposed rule change (SR–NASD–2006–
093) be, and hereby is, approved on an
accelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.15
Nancy M. Morris,
Secretary.
[FR Doc. E6–14598 Filed 8–29–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54375; File No. SR–NASD–
2006–092]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Regarding the Pricing
Schedule for NASD Members Using the
ITS/CAES System, Brut, and Inet To
Trade Securities Not Listed on The
NASDAQ Stock Market LLC
August 28, 2006.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 31,
2006, the National Association of
Securities Dealers, Inc. (‘‘NASD’’),
through its subsidiary, The Nasdaq
Stock Market, Inc. (‘‘Nasdaq’’), filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by Nasdaq. Nasdaq
filed the proposed rule change pursuant
to Section 19(b)(3)(A)(ii) of the Act,3
and Rule 19b–4(f)(2) thereunder,4 which
renders the proposal effective upon
filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq proposes to modify the
pricing for NASD members using the
ITS/CAES System and Brut and Inet
(‘‘Nasdaq Facilities’’) to trade securities
that are not listed on The NASDAQ
Stock Market LLC (‘‘Nasdaq
Exchange’’).5 Nasdaq states that it will
implement the proposed rule change on
August 1, 2006. The text of the proposed
rule change is set forth below. Proposed
new language is in italics; proposed
deletions are in [brackets].6
7010. System Services
(a)–(h) No change.
Order Execution:
Order that accesses the Quote/Order of a market participant that
does not charge an access fee to market participants accessing
its Quotes/Orders through the Nasdaq Facilities:
Charge to member entering order:
Members with an average daily volume through the Nasdaq
Facilities in all securities during the month of (i) more
than 30 million shares of liquidity provided, and (ii) more
than 50 million shares of liquidity accessed and/or routed; or members with an average daily volume through the
Nasdaq Facilities in all securities during the month of (i)
more than 20 million shares of liquidity provided, and (ii)
more than 60 million shares of liquidity accessed and/or
routed.
Other members .................................................................................
Credit to member providing liquidity:
Members with an average daily volume through the Nasdaq
Facilities in all securities during the month of more than
30 million shares of liquidity provided.
Other members ..........................................................................
sroberts on PROD1PC70 with NOTICES
13 15
U.S.C. 78s(b)(2).
U.S.C. 78s(b)(2).
15 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
VerDate Aug<31>2005
17:24 Sep 01, 2006
$0.0028 per share executed (or, in the case of executions against
Quotes/Orders at less than $1.00 per share, 0.1% of the total
transaction cost).
$0.0030 per share executed (or, in the case of executions against
Quotes/Orders at less than $1.00 per share, 0.1% of the total
transaction cost).
$0.0025 per share executed (or $0, in the case of executions against
Quotes/Orders at less than $1.00 per share).
$0.0020 per share executed (or $0, in the case of executions against
Quotes/Orders at less than $1.00 per share).
5 The Commission notes that Nasdaq filed a
proposed rule change to apply the same pricing
change to non-members. See Securities Exchange
Act Release No. 54376 (August 28, 2006) (File No.
SR–NASD–2006–093).
6 Nasdaq states that changes are marked to the
rule text that appears in the electronic NASD
Manual found at www.nasd.com, as further
amended on an immediately effective basis by SR–
14 15
Jkt 208001
(i) [Nasdaq Market Center]ITS/CAES
System, Brut, and Inet Order Execution
and Routing
(1) The following charges shall apply
to the use of the order execution and
routing services of the [Nasdaq Market
Center]ITS/CAES System, Brut, and Inet
(the ‘‘Nasdaq Facilities’’) by members
for all [Nasdaq-listed securities subject
to the Nasdaq UTP Plan and for]
Exchange-Traded Funds that are not
listed on The NASDAQ Stock Market
LLC [Nasdaq]. The term ‘‘ExchangeTraded Funds’’ shall mean Portfolio
Depository Receipts, Index Fund Shares,
and Trust Issued Receipts as such terms
are defined in Rule 4420(i), (j), and (l),
respectively, of The NASDAQ Stock
Market LLC. For purposes of
determining a member’s volume in all
securities under Rule 7010(i), the term
‘‘Nasdaq Facilities’’ shall also be
deemed to include the member’s volume
in Nasdaq-listed securities through the
facilities of The NASDAQ Stock Market
LLC.
PO 00000
Frm 00042
Fmt 4703
Sfmt 4703
NASD–2006–078 (June 30, 2006). See Securities
Exchange Act Release No. 54268 (August 3, 2006),
71 FR 45882 (August 10, 2006). Nasdaq states that
prior to the date when the Nasdaq Exchange begins
to trade securities that are not listed on the Nasdaq
Exchange, the Nasdaq Exchange will file a
conforming change to the rules of the Nasdaq
Exchange. The rules of the Nasdaq Exchange are
found at www.complinet.com/nasdaq.
E:\FR\FM\05SEN1.SGM
05SEN1
Federal Register / Vol. 71, No. 171 / Tuesday, September 5, 2006 / Notices
Order that accesses the Quote/Order of a market participant that
charges an access fee to market participants accessing its
Quotes/Orders through the Nasdaq Facilities:
Charge to member entering order:
Members with an average daily volume through the Nasdaq
Facilities in all securities during the month of more than
500,000 shares of liquidity provided.
Other members ..........................................................................
[Order Routing for Nasdaq-Listed Securities]:
[Any order entered by a member that is routed outside of the
Nasdaq Facilities and that does not attempt to execute in the
Nasdaq Facilities prior to routing].
[Any other order entered by a member that is routed outside of
the Nasdaq Facilities:]
[Members with an average daily volume through the Nasdaq
Facilities in all securities during the month of (i) more
than 30 million shares of liquidity provided, and (ii) more
than 50 million shares of liquidity accessed and/or routed; or members with an average daily volume through the
Nasdaq Facilities in all securities during the month of (i)
more than 20 million shares of liquidity provided, and (ii)
more than 60 million shares of liquidity accessed and/or
routed].
[Other members] ........................................................................
Order Routing for Exchange-Traded Funds Not Listed On Nasdaq:
Order routed to the New York Stock Exchange (‘‘NYSE’’)
through its DOT system.
Any other order entered by a member that is routed outside of
the Nasdaq Facilities and that does not attempt to execute in
the Nasdaq Facilities prior to routing.
Order routed to the American Stock Exchange (‘‘Amex’’) after attempting to execute in the Nasdaq Facilities.
Order routed through the Intermarket Trading System (‘‘ITS’’)
after attempting to execute in the Nasdaq Facilities.
Order routed to venues other than the NYSE and Amex after attempting to execute in the Nasdaq Facilities.
(2) No change.
(4) [Opening Cross] Reserved
[Members shall be assessed the
following Nasdaq Market Center
(5) [IPO/Halt Cross] Reserved
[Members shall be assessed the
following Nasdaq Market Center
[The greater of (i) $0.004 per share executed or (ii) a pass-through of
all applicable access fees charged by electronic communications
networks that charge more than $0.003 per share executed].
[The greater of (i) $0.0028 per share executed or (ii) a pass-through
of all applicable access fees charged by electronic communications networks that charge more than $0.003 per share executed].
[The greater of (i) $0.0030 per share executed or (ii) a pass-through
of all applicable access fees charged by electronic communications networks that charge more than $0.003 per share executed].
See DOT fee schedule in Rule 7010(i)[(6)] (7).
$0.004 per share executed.
$0.003 per share executed (plus, in the case of orders charged a fee
by the Amex specialist, $0.01 per share executed).
$0.0007 per share executed.
$0.003 per share executed.
(6) Except as provided in paragraph
(7), the following charges shall apply to
the use of the order execution and
[No charge for execution].
[$0.0005 per share executed for the net number of buy and sell
shares up to a maximum of $10,000 per firm per month].
[No charge for execution].
[$0.0005 per share executed].
routing services of the Nasdaq Facilities
by members for securities subject to the
Consolidated Quotations Service and
Order Execution:
Order that accesses the Quote/Order of a Nasdaq Facility market
participant:
Charge to member entering order ....................................................
Credit to member providing liquidity for a Covered Security listed on NYSE and The NASDAQ Stock Market LLC:.
Jkt 208001
[$0.0005 per share executed].
execution fees for quotes and orders
executed in the Nasdaq IPO/Halt Cross:]
[All quotes and orders executed in the Nasdaq IPO/Halt Cross] .........
sroberts on PROD1PC70 with NOTICES
$0.001 per share executed.
execution fees for quotes and orders
executed in the Nasdaq Opening Cross:]
[Market-on-Open, Limit-on-Open, Good-till-Cancelled, Immediate-orCancel, and Day orders executed in the Nasdaq Opening Cross].
[All other quotes and orders executed in the Nasdaq Opening Cross]
17:24 Sep 01, 2006
$0.001 per share executed (but no more than $10,000 per month).
(3) [Closing Cross] Reserved
[Market-on-Close and Limit-on-Close orders executed in the Nasdaq
Closing Cross].
[All other quotes and orders executed in the Nasdaq Closing Cross]
VerDate Aug<31>2005
52359
PO 00000
Frm 00043
Fmt 4703
Consolidated Tape Association plans
other than Exchange-Traded Funds
(‘‘Covered Securities’’):
$0.0007 per share executed.
$0.0007 per share executed.
Sfmt 4703
E:\FR\FM\05SEN1.SGM
05SEN1
52360
Federal Register / Vol. 71, No. 171 / Tuesday, September 5, 2006 / Notices
Credit to a member providing liquidity for other Covered Securities.
Members with an average daily volume through the Nasdaq Facilities in Covered Securities during the month of more than 5
million shares of liquidity accessed, provided, or routed but
less than 10 million shares of liquidity provided.
Members with an average daily volume through the Nasdaq Facilities in Covered Securities during the month of 10 million
or more shares of liquidity provided.
Other members .................................................................................
Order Routing:
Order routed to Amex ......................................................................
Order routed through the ITS ..........................................................
Order routed to NYSE ......................................................................
Order for NYSE-listed Covered Security routed to venue other
than the NYSE.
Order for Covered Security listed on venue other than the NYSE
and routed to venue other than Amex.
(7) The following [classes] charges
shall apply to the use of the Nasdaq
(8) When a market participant enters
an order into Nasdaq’s Brut or Inet
systems that is sent to an ITS/CAES
System [Nasdaq Market Center] market
participant that charges an access fee to
Brut or Inet, the market participant
entering the order shall be charged (i)
the applicable execution fee of the
Nasdaq Facilities, or (ii) in the case of
executions against Quotes/Orders at less
than $1.00 per share, a pass-through of
the access fee charged to Brut or Inet.
(9) No change.
(j)–(y) No change.
*
*
*
*
*
sroberts on PROD1PC70 with NOTICES
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Nasdaq included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. Nasdaq has prepared
summaries, set forth in Sections A, B,
and C below, of the most significant
aspects of such statements.
17:24 Sep 01, 2006
Jkt 208001
$0.0006 per share executed.
No credit.
$0.003 per share executed (plus, in the case of orders charged a fee
by the Amex specialist, $0.01 per share executed).
$0.0007 per share executed.
See DOT fee schedule in Rule 7010(i)(7).
$0.001 per share executed.
$0.003 per share executed.
Facilities by members for routing to the
NYSE through its DOT system for all
Order charged a fee by the NYSE specialist ..........................................
Order that attempts to execute in the Nasdaq Facilities prior to routing and that is not charged a fee by the NYSE specialist.
Order that does not attempt to execute in the Nasdaq Facilities prior
to routing and that is not charged a fee by the NYSE specialist[:].
[Average daily shares of liquidity routed through Nasdaq’s DOT
linkage by the member during the month:]
[More than 30 million] .............................................................
[Between 2,000,001 and 30 million] ........................................
[Between 250,001 and 2 million] .............................................
[Between 100,001 and 250,000] ...............................................
[100,000 or less] ........................................................................
VerDate Aug<31>2005
$0.0005 per share executed.
$0.01 per share executed.
[No charge] $0.0002 per share executed (but no more than $60,000
per month).
$0.0003 per share executed.
[$0.0001 per share executed].
[$0.0003 per share executed].
[$0.0005 per share executed].
[$0.001 per share executed].
[$0.01 per share executed].
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Transition to Operation of the Nasdaq
Exchange
Nasdaq proposes to amend NASD
Rule 7010(i), which has historically
contained the fees for the trading
systems of The Nasdaq Stock Market, to
reflect the Nasdaq Exchange’s
commencing operations for trading of
securities listed on the Nasdaq
Exchange. During a transitional period,
the Nasdaq Exchange will operate for its
own listed stocks, while The Nasdaq
Stock Market, Inc. continues to operate
under authority delegated by NASD to
provide quotation, execution, and trade
reporting services for non-Nasdaq listed
securities. Nasdaq states that the Brut
and Inet platforms owned by Nasdaq
will be operated as facilities of the
Nasdaq Exchange for purposes of
trading Nasdaq-listed securities, and as
facilities of NASD for purposes of
trading non-Nasdaq securities.
Accordingly, Nasdaq is amending NASD
Rule 7010(i) to remove fees and credits
associated with trading Nasdaq-listed
stocks, which are now contained in Rule
PO 00000
Frm 00044
Fmt 4703
securities, including Exchange-Traded
Funds:
Sfmt 4703
7018 of the Nasdaq Exchange.7 Nasdaq
states that NASD Rule 7010(i) would
continue to govern fees and credits for
the ITS/CAES System (formerly the
Nasdaq Market Center) operated by
Nasdaq for trading non-Nasdaq
securities, as well as Brut and Inet to the
extent that they are used for trading
non-Nasdaq securities. The ITS/CAES
System, Brut and Inet are collectively
referred to in the proposed rule as the
Nasdaq Facilities.
Nasdaq states that, because the level
of some of the current fees for
transactions in non-Nasdaq stocks
depends upon a market participant’s
monthly transaction volume in all
securities (i.e., Nasdaq-listed and nonNasdaq listed), Nasdaq is adding a
sentence to the proposed rule to provide
that, for purposes of determining a
member’s volume in all securities under
NASD Rule 7010(i), the term ‘‘Nasdaq
Facilities,’’ shall also be deemed to
7 See Securities Exchange Act Release No. 54285
(August 8, 2006) (File No. SR–NASDAQ–2006–023)
(notice of filing and immediate effectiveness of
proposed rule change regarding technical and
conforming changes to Nasdaq Rule 7018).
Telephone conversation among John Yetter, Senior
Associate General Counsel, Nasdaq, David Liu,
Special Counsel, Division of Market Regulation
(‘‘Division’’), Commission, and Theodore S. Venuti,
Attorney, Division, Commission, on August 14,
2006.
E:\FR\FM\05SEN1.SGM
05SEN1
Federal Register / Vol. 71, No. 171 / Tuesday, September 5, 2006 / Notices
include the member’s volume in
Nasdaq-listed securities traded through
the facilities of the Nasdaq Exchange
(i.e., the Nasdaq Market Center, Brut
and Inet). Nasdaq states that this
clarification is necessary to ensure that
fees and credits for trading non-Nasdaq
securities remain at their current levels
during the transitional period before the
Nasdaq Exchange begins to trade nonNasdaq securities.
Fee Changes
Nasdaq also proposes to change its
fees for routing orders to the New York
Stock Exchange (‘‘NYSE’’) through its
DOT system. NYSE recently announced
that it would impose a significant fee
increase on broker-dealers, such as
Nasdaq’s Brut broker-dealer, that route
orders to the NYSE floor through DOT,
effective August 1, 2006.8 Nasdaq states
that as a result, it must pass these
increased costs through to market
participants that make use of the routing
service. Specifically, for orders that
attempt to execute in the Nasdaq
Facilities prior to routing and that are
not charged a fee by the NYSE
specialist,9 Nasdaq is proposing a
charge of $0.0002 per share executed;
however, the total fee for all such orders
routed during a month is capped at
$60,000. For orders that are routed
through DOT but that do not attempt to
execute in the Nasdaq Facilities, the
routing fee is $0.0003 per share
executed, with no cap.
Finally, to encourage greater liquidity
provision with respect to securities that
are listed on both the NYSE and the
Nasdaq Exchange, Nasdaq proposes to
increase the credit to liquidity providers
in these securities, from $0.0005 or
$0.0006 per share executed (depending
on the member’s volume) to $0.0007 per
share executed. Nasdaq believes that the
change would promote greater
competition between Nasdaq and NYSE
and enhance market quality with
respect to Nasdaq’s trading of these
dual-listed securities.
2. Statutory Basis
sroberts on PROD1PC70 with NOTICES
Nasdaq believes that the proposed
rule change is consistent with the
8 See Securities Exchange Act Release No. 54142
(July 13, 2006), 71 FR 41493 (July 21, 2006) (File
No. SR–NYSE–2006–46). Effective August 1, 2006,
the NYSE is imposing a new charge of $0.00025 per
share executed, subject to a monthly cap of
$750,000.
9 Nasdaq states that the NYSE specialist fees are
distinct from the new DOT fees imposed by the
NYSE itself. Specialist fees are generally imposed
when orders routed to the NYSE remain unexecuted
for a period of time. The routing fee for orders that
are charged by the specialist remains $0.01 per
share executed.
VerDate Aug<31>2005
17:24 Sep 01, 2006
Jkt 208001
provisions of Section 15A of the Act,10
in general, and with Section 15A(b)(5)
of the Act,11 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees and other charges
among members and issuers and other
persons using any facility or system
which the NASD operates or controls.
Nasdaq states that its changes in routing
fees are necessitated by increased costs
imposed on Nasdaq’s routing brokerdealer by NYSE. Nasdaq believes that
the increased liquidity provider credit
for dual-listed stocks will promote
greater competition between the two
primary listing markets in the U.S.
Finally, Nasdaq believes the changes to
reflect operation of the Nasdaq
Exchange for trading Nasdaq-listed
securities are needed to maintain the
current levels of other fees and credits
associated with trading non-Nasdaq
securities.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is subject to
Section 19(b)(3)(A)(ii) of the Act 12 and
subparagraph (f)(2) of Rule 19b–4
thereunder 13 because it establishes or
changes a due, fee, or other charge
applicable only to a member imposed by
the self-regulatory organization.
Accordingly, the proposal is effective
upon Commission receipt of the filing.
At any time within 60 days of the filing
of the proposed rule change, the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
10 15
U.S.C. 78o–3.
U.S.C. 78o–3(b)(5).
12 15 U.S.C. 78s(b)(3)(A)(ii).
13 17 CFR 240.19b–4(f)(2).
11 15
PO 00000
Frm 00045
Fmt 4703
Sfmt 4703
52361
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
No. SR–NASD–2006–092 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File No.
SR–NASD–2006–092. This file number
should be included on the subject line
if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room. Copies of such filing will also be
available for inspection and copying at
the principal office of the NASD. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File No.
SR–NASD–2006–092 and should be
submitted on or before September 26,
2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.14
Nancy M. Morris,
Secretary.
[FR Doc. E6–14599 Filed 9–1–06; 8:45 am]
BILLING CODE 8010–01–P
14 17
E:\FR\FM\05SEN1.SGM
CFR 200.30–3(a)(12).
05SEN1
]]>Agencies
[Federal Register Volume 71, Number 171 (Tuesday, September 5, 2006)]
[Notices]
[Pages 52358-52361]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-14599]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54375; File No. SR-NASD-2006-092]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Regarding the Pricing Schedule for NASD Members Using the
ITS/CAES System, Brut, and Inet To Trade Securities Not Listed on The
NASDAQ Stock Market LLC
August 28, 2006.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 31, 2006, the National Association of Securities Dealers, Inc.
(``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc.
(``Nasdaq''), filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by Nasdaq. Nasdaq filed
the proposed rule change pursuant to Section 19(b)(3)(A)(ii) of the
Act,\3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq proposes to modify the pricing for NASD members using the
ITS/CAES System and Brut and Inet (``Nasdaq Facilities'') to trade
securities that are not listed on The NASDAQ Stock Market LLC (``Nasdaq
Exchange'').\5\ Nasdaq states that it will implement the proposed rule
change on August 1, 2006. The text of the proposed rule change is set
forth below. Proposed new language is in italics; proposed deletions
are in [brackets].\6\
---------------------------------------------------------------------------
\5\ The Commission notes that Nasdaq filed a proposed rule
change to apply the same pricing change to non-members. See
Securities Exchange Act Release No. 54376 (August 28, 2006) (File
No. SR-NASD-2006-093).
\6\ Nasdaq states that changes are marked to the rule text that
appears in the electronic NASD Manual found at www.nasd.com, as
further amended on an immediately effective basis by SR-NASD-2006-
078 (June 30, 2006). See Securities Exchange Act Release No. 54268
(August 3, 2006), 71 FR 45882 (August 10, 2006). Nasdaq states that
prior to the date when the Nasdaq Exchange begins to trade
securities that are not listed on the Nasdaq Exchange, the Nasdaq
Exchange will file a conforming change to the rules of the Nasdaq
Exchange. The rules of the Nasdaq Exchange are found at
www.complinet.com/nasdaq.
---------------------------------------------------------------------------
7010. System Services
(a)-(h) No change.
(i) [Nasdaq Market Center]ITS/CAES System, Brut, and Inet Order
Execution and Routing
(1) The following charges shall apply to the use of the order
execution and routing services of the [Nasdaq Market Center]ITS/CAES
System, Brut, and Inet (the ``Nasdaq Facilities'') by members for all
[Nasdaq-listed securities subject to the Nasdaq UTP Plan and for]
Exchange-Traded Funds that are not listed on The NASDAQ Stock Market
LLC [Nasdaq]. The term ``Exchange-Traded Funds'' shall mean Portfolio
Depository Receipts, Index Fund Shares, and Trust Issued Receipts as
such terms are defined in Rule 4420(i), (j), and (l), respectively, of
The NASDAQ Stock Market LLC. For purposes of determining a member's
volume in all securities under Rule 7010(i), the term ``Nasdaq
Facilities'' shall also be deemed to include the member's volume in
Nasdaq-listed securities through the facilities of The NASDAQ Stock
Market LLC.
Order Execution:
Order that accesses the Quote/Order
of a market participant that does
not charge an access fee to market
participants accessing its Quotes/
Orders through the Nasdaq
Facilities:
Charge to member entering order:
Members with an average daily $0.0028 per share executed (or,
volume through the Nasdaq in the case of executions
Facilities in all securities against Quotes/Orders at less
during the month of (i) more than $1.00 per share, 0.1% of
than 30 million shares of the total transaction cost).
liquidity provided, and (ii)
more than 50 million shares of
liquidity accessed and/or
routed; or members with an
average daily volume through
the Nasdaq Facilities in all
securities during the month of
(i) more than 20 million
shares of liquidity provided,
and (ii) more than 60 million
shares of liquidity accessed
and/or routed.
Other members...................... $0.0030 per share executed (or,
in the case of executions
against Quotes/Orders at less
than $1.00 per share, 0.1% of
the total transaction cost).
Credit to member providing
liquidity:
Members with an average daily $0.0025 per share executed (or
volume through the Nasdaq $0, in the case of executions
Facilities in all securities against Quotes/Orders at less
during the month of more than than $1.00 per share).
30 million shares of liquidity
provided.
Other members.................. $0.0020 per share executed (or
$0, in the case of executions
against Quotes/Orders at less
than $1.00 per share).
[[Page 52359]]
Order that accesses the Quote/Order
of a market participant that
charges an access fee to market
participants accessing its Quotes/
Orders through the Nasdaq
Facilities:
Charge to member entering order:
Members with an average daily $0.001 per share executed (but
volume through the Nasdaq no more than $10,000 per
Facilities in all securities month).
during the month of more than
500,000 shares of liquidity
provided.
Other members.................. $0.001 per share executed.
[Order Routing for Nasdaq-Listed
Securities]:
[Any order entered by a member that [The greater of (i) $0.004 per
is routed outside of the Nasdaq share executed or (ii) a pass-
Facilities and that does not through of all applicable
attempt to execute in the Nasdaq access fees charged by
Facilities prior to routing]. electronic communications
networks that charge more than
$0.003 per share executed].
[Any other order entered by a
member that is routed outside of
the Nasdaq Facilities:]
[Members with an average daily [The greater of (i) $0.0028 per
volume through the Nasdaq share executed or (ii) a pass-
Facilities in all securities through of all applicable
during the month of (i) more access fees charged by
than 30 million shares of electronic communications
liquidity provided, and (ii) networks that charge more than
more than 50 million shares of $0.003 per share executed].
liquidity accessed and/or
routed; or members with an
average daily volume through
the Nasdaq Facilities in all
securities during the month of
(i) more than 20 million
shares of liquidity provided,
and (ii) more than 60 million
shares of liquidity accessed
and/or routed].
[Other members]................ [The greater of (i) $0.0030 per
share executed or (ii) a pass-
through of all applicable
access fees charged by
electronic communications
networks that charge more than
$0.003 per share executed].
Order Routing for Exchange-Traded Funds
Not Listed On Nasdaq:
Order routed to the New York Stock See DOT fee schedule in Rule
Exchange (``NYSE'') through its 7010(i)[(6)] (7).
DOT system.
Any other order entered by a member $0.004 per share executed.
that is routed outside of the
Nasdaq Facilities and that does
not attempt to execute in the
Nasdaq Facilities prior to routing.
Order routed to the American Stock $0.003 per share executed
Exchange (``Amex'') after (plus, in the case of orders
attempting to execute in the charged a fee by the Amex
Nasdaq Facilities. specialist, $0.01 per share
executed).
Order routed through the $0.0007 per share executed.
Intermarket Trading System
(``ITS'') after attempting to
execute in the Nasdaq Facilities.
Order routed to venues other than $0.003 per share executed.
the NYSE and Amex after attempting
to execute in the Nasdaq
Facilities.
(2) No change.
(3) [Closing Cross] Reserved
[Market-on-Close and Limit-on-Close [$0.0005 per share executed].
orders executed in the Nasdaq Closing
Cross].
[All other quotes and orders executed [No charge for execution].
in the Nasdaq Closing Cross].
(4) [Opening Cross] Reserved
[Members shall be assessed the following Nasdaq Market Center
execution fees for quotes and orders executed in the Nasdaq Opening
Cross:]
[Market-on-Open, Limit-on-Open, Good- [$0.0005 per share executed for
till-Cancelled, Immediate-or-Cancel, the net number of buy and sell
and Day orders executed in the Nasdaq shares up to a maximum of
Opening Cross]. $10,000 per firm per month].
[All other quotes and orders executed [No charge for execution].
in the Nasdaq Opening Cross].
(5) [IPO/Halt Cross] Reserved
[Members shall be assessed the following Nasdaq Market Center
execution fees for quotes and orders executed in the Nasdaq IPO/Halt
Cross:]
[All quotes and orders executed in the [$0.0005 per share executed].
Nasdaq IPO/Halt Cross].
(6) Except as provided in paragraph (7), the following charges
shall apply to the use of the order execution and routing services of
the Nasdaq Facilities by members for securities subject to the
Consolidated Quotations Service and Consolidated Tape Association plans
other than Exchange-Traded Funds (``Covered Securities''):
Order Execution:
Order that accesses the Quote/Order ...............................
of a Nasdaq Facility market
participant:
Charge to member entering order.... $0.0007 per share executed.
Credit to member providing $0.0007 per share executed.
liquidity for a Covered Security
listed on NYSE and The NASDAQ
Stock Market LLC:.
[[Page 52360]]
Credit to a member providing ...............................
liquidity for other Covered
Securities.
Members with an average daily $0.0005 per share executed.
volume through the Nasdaq
Facilities in Covered Securities
during the month of more than 5
million shares of liquidity
accessed, provided, or routed but
less than 10 million shares of
liquidity provided.
Members with an average daily $0.0006 per share executed.
volume through the Nasdaq
Facilities in Covered Securities
during the month of 10 million or
more shares of liquidity provided.
Other members...................... No credit.
Order Routing:
Order routed to Amex............... $0.003 per share executed
(plus, in the case of orders
charged a fee by the Amex
specialist, $0.01 per share
executed).
Order routed through the ITS....... $0.0007 per share executed.
Order routed to NYSE............... See DOT fee schedule in Rule
7010(i)(7).
Order for NYSE-listed Covered $0.001 per share executed.
Security routed to venue other
than the NYSE.
Order for Covered Security listed $0.003 per share executed.
on venue other than the NYSE and
routed to venue other than Amex.
(7) The following [classes] charges shall apply to the use of the
Nasdaq Facilities by members for routing to the NYSE through its DOT
system for all securities, including Exchange-Traded Funds:
Order charged a fee by the NYSE $0.01 per share executed.
specialist.
Order that attempts to execute in the [No charge] $0.0002 per share
Nasdaq Facilities prior to routing and executed (but no more than
that is not charged a fee by the NYSE $60,000 per month).
specialist.
Order that does not attempt to execute $0.0003 per share executed.
in the Nasdaq Facilities prior to
routing and that is not charged a fee
by the NYSE specialist[:].
[Average daily shares of liquidity ...............................
routed through Nasdaq's DOT
linkage by the member during the
month:]
[More than 30 million]......... [$0.0001 per share executed].
[Between 2,000,001 and 30 [$0.0003 per share executed].
million].
[Between 250,001 and 2 million] [$0.0005 per share executed].
[Between 100,001 and 250,000].. [$0.001 per share executed].
[100,000 or less].............. [$0.01 per share executed].
(8) When a market participant enters an order into Nasdaq's Brut or
Inet systems that is sent to an ITS/CAES System [Nasdaq Market Center]
market participant that charges an access fee to Brut or Inet, the
market participant entering the order shall be charged (i) the
applicable execution fee of the Nasdaq Facilities, or (ii) in the case
of executions against Quotes/Orders at less than $1.00 per share, a
pass-through of the access fee charged to Brut or Inet.
(9) No change.
(j)-(y) No change.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, Nasdaq included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. Nasdaq has prepared summaries, set forth in Sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Transition to Operation of the Nasdaq Exchange
Nasdaq proposes to amend NASD Rule 7010(i), which has historically
contained the fees for the trading systems of The Nasdaq Stock Market,
to reflect the Nasdaq Exchange's commencing operations for trading of
securities listed on the Nasdaq Exchange. During a transitional period,
the Nasdaq Exchange will operate for its own listed stocks, while The
Nasdaq Stock Market, Inc. continues to operate under authority
delegated by NASD to provide quotation, execution, and trade reporting
services for non-Nasdaq listed securities. Nasdaq states that the Brut
and Inet platforms owned by Nasdaq will be operated as facilities of
the Nasdaq Exchange for purposes of trading Nasdaq-listed securities,
and as facilities of NASD for purposes of trading non-Nasdaq
securities. Accordingly, Nasdaq is amending NASD Rule 7010(i) to remove
fees and credits associated with trading Nasdaq-listed stocks, which
are now contained in Rule 7018 of the Nasdaq Exchange.\7\ Nasdaq states
that NASD Rule 7010(i) would continue to govern fees and credits for
the ITS/CAES System (formerly the Nasdaq Market Center) operated by
Nasdaq for trading non-Nasdaq securities, as well as Brut and Inet to
the extent that they are used for trading non-Nasdaq securities. The
ITS/CAES System, Brut and Inet are collectively referred to in the
proposed rule as the Nasdaq Facilities.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 54285 (August 8,
2006) (File No. SR-NASDAQ-2006-023) (notice of filing and immediate
effectiveness of proposed rule change regarding technical and
conforming changes to Nasdaq Rule 7018). Telephone conversation
among John Yetter, Senior Associate General Counsel, Nasdaq, David
Liu, Special Counsel, Division of Market Regulation (``Division''),
Commission, and Theodore S. Venuti, Attorney, Division, Commission,
on August 14, 2006.
---------------------------------------------------------------------------
Nasdaq states that, because the level of some of the current fees
for transactions in non-Nasdaq stocks depends upon a market
participant's monthly transaction volume in all securities (i.e.,
Nasdaq-listed and non-Nasdaq listed), Nasdaq is adding a sentence to
the proposed rule to provide that, for purposes of determining a
member's volume in all securities under NASD Rule 7010(i), the term
``Nasdaq Facilities,'' shall also be deemed to
[[Page 52361]]
include the member's volume in Nasdaq-listed securities traded through
the facilities of the Nasdaq Exchange (i.e., the Nasdaq Market Center,
Brut and Inet). Nasdaq states that this clarification is necessary to
ensure that fees and credits for trading non-Nasdaq securities remain
at their current levels during the transitional period before the
Nasdaq Exchange begins to trade non-Nasdaq securities.
Fee Changes
Nasdaq also proposes to change its fees for routing orders to the
New York Stock Exchange (``NYSE'') through its DOT system. NYSE
recently announced that it would impose a significant fee increase on
broker-dealers, such as Nasdaq's Brut broker-dealer, that route orders
to the NYSE floor through DOT, effective August 1, 2006.\8\ Nasdaq
states that as a result, it must pass these increased costs through to
market participants that make use of the routing service. Specifically,
for orders that attempt to execute in the Nasdaq Facilities prior to
routing and that are not charged a fee by the NYSE specialist,\9\
Nasdaq is proposing a charge of $0.0002 per share executed; however,
the total fee for all such orders routed during a month is capped at
$60,000. For orders that are routed through DOT but that do not attempt
to execute in the Nasdaq Facilities, the routing fee is $0.0003 per
share executed, with no cap.
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 54142 (July 13,
2006), 71 FR 41493 (July 21, 2006) (File No. SR-NYSE-2006-46).
Effective August 1, 2006, the NYSE is imposing a new charge of
$0.00025 per share executed, subject to a monthly cap of $750,000.
\9\ Nasdaq states that the NYSE specialist fees are distinct
from the new DOT fees imposed by the NYSE itself. Specialist fees
are generally imposed when orders routed to the NYSE remain
unexecuted for a period of time. The routing fee for orders that are
charged by the specialist remains $0.01 per share executed.
---------------------------------------------------------------------------
Finally, to encourage greater liquidity provision with respect to
securities that are listed on both the NYSE and the Nasdaq Exchange,
Nasdaq proposes to increase the credit to liquidity providers in these
securities, from $0.0005 or $0.0006 per share executed (depending on
the member's volume) to $0.0007 per share executed. Nasdaq believes
that the change would promote greater competition between Nasdaq and
NYSE and enhance market quality with respect to Nasdaq's trading of
these dual-listed securities.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\10\ in general, and with
Section 15A(b)(5) of the Act,\11\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among members and issuers and other persons using any facility or
system which the NASD operates or controls. Nasdaq states that its
changes in routing fees are necessitated by increased costs imposed on
Nasdaq's routing broker-dealer by NYSE. Nasdaq believes that the
increased liquidity provider credit for dual-listed stocks will promote
greater competition between the two primary listing markets in the U.S.
Finally, Nasdaq believes the changes to reflect operation of the Nasdaq
Exchange for trading Nasdaq-listed securities are needed to maintain
the current levels of other fees and credits associated with trading
non-Nasdaq securities.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78o-3.
\11\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is subject to Section 19(b)(3)(A)(ii) of
the Act \12\ and subparagraph (f)(2) of Rule 19b-4 thereunder \13\
because it establishes or changes a due, fee, or other charge
applicable only to a member imposed by the self-regulatory
organization. Accordingly, the proposal is effective upon Commission
receipt of the filing. At any time within 60 days of the filing of the
proposed rule change, the Commission may summarily abrogate such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
\13\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File No. SR-NASD-2006-092 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File No. SR-NASD-2006-092. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room. Copies of such
filing will also be available for inspection and copying at the
principal office of the NASD. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File No. SR-NASD-2006-092 and should be submitted on or before
September 26, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Nancy M. Morris,
Secretary.
[FR Doc. E6-14599 Filed 9-1-06; 8:45 am]
BILLING CODE 8010-01-P
